Blogs from Capital Portfolio Advisors
  • September 9, 2021
  • cp@_bl0g
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Post the financial crisis, the stock markets globally have given stupendous returns. In India, last 10 years have witnessed several upheavals like demonetization, GST, change of government, virus, floods, etc. We decided to study this period to check for out on business groups that have sailed through turbulent period with elan. We studied business groups that have a market cap of around Rs. 50000 crs or more. Needless to mention the results have been interesting. Given below are some tables that give details of performances. Please note that the prices are as of 27/8/2021 and the details have been sourced from Ace Equity.

Table 1: Top 15 Business Groups by Market Cap performance

Rank Group Group Market Capitalisation CAGR
    Today 10 yrs ago Growth(%)  
   
1 SRF 61266 1837 3235% 42%
2 Siyaram Poddar 45947 1919 2294% 37%
3 Berger Paints 80743 3423 2259% 37%
4 Info Edge 86548 3730 2220% 36%
5 Eicher 76546 4318 1673% 33%
6 Shree Cement 109762 6387 1619% 32%
7 Wadia 109739 7683 1328% 30%
8 Divis 138297 9715 1324% 29%
9 Parekh 113020 8271 1266% 29%
10 Bajaj 852765 66896 1175% 28%
11 Shiv Nadar 318652 28164 1031% 26%
12 Asian Paints 320252 30208 960% 25%
13 Apollo Hospitals 69214 6813 916% 25%
14 TVS 84101 8473 893% 24%
15 Motherson Sumi 66648 6855 872% 24%

Table 2: Contributors to change in cumulative market cap of business groups

Company name Market Cap Contn. to Group  Contn. to Group CAGR
  Today 10 yrs ago Growth Today 10 yrs ago  
Balkrishna Ind 44281 1641 2598% 96% 86% 39%
Bajaj Finance 420300 2252 18567% 49% 3% 69%
Bajaj Finserv 257782 7835 3190% 30% 12% 41%
Zensar Technologies 10016 517 1837% 39% 20% 34%
Sundaram Finance 28803 2931 883% 34% 35% 24%
Sundaram Fasteners 16237 1281 1168% 19% 15% 28%
TVS Motors 24275 2627 824% 29% 31% 23%
JSW Steel 163730 15129 982% 78% 61% 26%
Piramal Enterprises 61336 6031 917% 99% 76% 25%
HDFC Bank 857407 110354 677% 55% 53% 21%
Firstsource Solns 12697 523 2326% 39% 11% 37%
Cholamandalam Finance 42997 1821 2261% 34% 9% 37%
Ultratech Cement 218438 29334 645% 46% 26% 20%
Godrej Consumer 107801 13759 683% 59% 55% 21%
Godrej Properties 40938 4808 751% 23% 19% 22%
Mindtree 60027 1375 4266% 14% 1% 46%
Tech Mahindra 140223 8235 1603% 52% 13% 32%
Tata Communications Ltd. 39545 5782 584% 2% 2% 19%
Tata Consultancy Services Ltd. 1376102 203668 576% 64% 53% 19%
Tata Consumer Products Ltd. 78096 5782 1251% 4% 2% 29%
Tata Elxsi Ltd. 30330 609 4875% 1% 0% 48%
Titan Company Ltd. 161799 18248 787% 8% 5% 23%
Trent Ltd. 33716 2241 1404% 2% 1% 30%
Voltas 32583 3834 750% 2% 1% 22%
Torrent Pharma 51645 2536 1936% 69% 19% 34%
Sterlite Tech 10862 1422 663% 4% 2% 21%
Vedanta 114601 17338 561% 44% 25% 19%
Britannia Ind 99287 5609 1670% 90% 73% 33%

Note: Business Groups with top performing solitary companies, have been excluded from this table, e.g. Reliance Ind.,Pidilite Industries, Asian Paints, etc.

Table 3: Performance of groups that have a cumulative market cap of more than Rs. 5 lac crores

S.no. Group Group Market Capitalisation CAGR
Today 10 yrs ago Growth(%)  
   
1 Government 2461260 1540401 60% 5%
2 Tatas 2137181 384524 456% 16%
3 HDFC 1555436 207861 648% 21%
4 Mukesh Ambani Group 1518139 259689 485% 17%
5 Bajaj 852766 66896 1175% 28%
6 Adani 813684 108647 649% 21%
7 Infosys 715204 145491 392% 15%
8 ICICI 672836 100628 569% 19%

Table 4: Top 5 winners and bottom 5 losers among Government owned companies

S.no. Company Market Capitalisation CAGR
Today 10 yrs ago Growth(%)  
       
Winners        
       
1 Canfin Homes 6994 195 3487% 43%
2 ITI 10651 688 1448% 31%
3 Bank of Maharashtra 12114 2449 395% 15%
4 Bharat Immunological 214 44 386% 14%
5 BPCL 102226 24369 319% 12%
 
Laggards  
 
1 MMTC 6727 69755 -90%
2 BHEL 18855 86532 -78%
3 Coal India 85415 236832 -64%
4 Punjab Communication 37 110 -66%
5 GMDC 2245 5663 -60%

Observations:

  • It is interesting to see how erstwhile midcap companies have gradually transformed into large midcaps or largecaps, despite a tumultuous decade. These smaller groups, most of whom are single company business groups have stayed focused on their business, maintained a strong balance sheet, have become asset light, have attractive return ratios and maintained high levels of corporate governance. In Table 1, most of the companies are such transformed groups. Conventionally well-known groups like Bajaj, Shiv Nadar, TVS, Wadias, etc have demonstrated enough nimbleness and business acumen to figure in the top 15, amidst the onslaught of the single company focused business groups.
  • It is the technology, financials and consumer businesses that have done well in the last 10 years, which is not very surprising. The sluggishness in the manufacturing sector is apparent from the list of top performers. However, there are some exceptions like Balkrishna Industries, TVS Motors, Ultratech Cement, Shree Cement, etc which have put up a resolute show.
  • Several business groups have benefitted from demerging businesses and listing them and/or listing their unlisted businesses. The largest beneficiary of this exercise has been the Adani group which has seen it’s market group swell by 8 times, in the last 10 years, with most of the incremental market cap coming in from the new listings. Similarly, ICICI and HDFC groups too have benefitted by listing their insurance/AMC arms.
  • Biggest gainers have been the financial service arms of the Bajaj group, who contributed only 15% to the group market cap 10 years ago, but now contribute an astounding 79%. CAGR of Bajaj Finance has been 69%, for the last years!! Similarly, companies like Balkrishna Industries, Ultratech Cement, Cholamandalam Finance, JSW Steel, Britannia Industries, TCS, Vedanta, Mindtree, Firstsource Solutions, Tech Mahindra, Torrent Pharma, etc have done well to be only/large contributors to the growth in group market caps.
  • The Tata group has seen widespread re-rating in it’s businesses, which makes them unique. While the technology businesses have done better than the others, non tech businesses have also given robust returns. The group returning 16% CAGR over the last 10 years despite it’s size and fragmentation, is commendable. With initiatives underway to consolidate the group, the next 10 years could be interesting for the group.
  • Considering the commodity nature of their business and the in-built volatility, the Sajjan Jindal, AV Birla and Vedanta groups have done well to deliver attractive returns, enough to compete with several stabler businesses
  • Government owned companies continue to be laggards. 10 years ago their cumulative market cap was about 5 times the next largest group, i.e. Tatas. Today the Tatas have closed in on the Government group. Next 10 years should witness the pecking order change significantly, for very large business groups. Canfin Homes, despite being Government owned, has been an interesting outlier and has delivered returns that could challenge several private sector compatriots!

While we have only considered groups with market caps of more than Rs. 50000 crs for the study, there are several smaller groups that have also done very well over the last decade and have the potential of featuring among the top 15, in the next decade.

The performance of corporate India is exemplary considering the numerous headwinds that they faced in the last decade. The “solution-finding” spirit and the solid control on costs, is what keeps our entrepreneurs at the top!!

Hope you find these statistics of use! A small request as always to write your suggestions or comments in the comment box to enable us to improve.

Happy investing!

Disclaimer

This article has been written by Team Capital Portfolio Advisors. Any part of the content of this article should not be construed as, an offer or solicitation to buy or sell any securities or make any investments. The content shall not to be relied upon as advisory or authoritative or taken in substitution for the exercise of due diligence and judgement by any user nor should it be used as a basis for making any decisions, without exercising user’s own judgment or diligence. As a condition for using this Blog, the user agrees that Capital Portfolio Advisor (CPA), its Founder or any of it’s employees make no representation and shall have no liability for any loss or damage, direct or indirect, arising from the use of the Blog. CPA reserves the right to change the content of the Blog without prior notice.

4 comments on “Study of Market Cap Performance of Large Business Groups

  1. Excellent analysis with supporting data to give an overall prospective of leading businesses , very helpful for making future decisions.
    Thanks so much sir for the report.

    1. Thank you very much for your encouraging comments. Do keep on giving us your views on our articles to be able to improvise and keep on adding value to our readers.

  2. Excellent in-depth research & data compilation.Job well done. It is pertinent to note that, all 4 tables are immaculately compiled, significantly attributes in arriving at informed decision for growth oriented investments, may lead to Wealth creation!

    Best wishes always!

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